The Blackmores Limited (ASX: BKL) share price may have edged higher in morning trade, but it is still down significantly this year.
Since the start of the year the health supplements company's shares have lost 23% of their value.
Whilst this is bad, it's even worse for investors that bought in just a little over six months ago when its shares peaked at $166.76. Since hitting that 52-week high, Blackmores' shares have shed 44% of their value.
Why has the Blackmores share price crashed lower?
Investors have been selling Blackmores' shares since the release of a bitterly disappointing half year result last month.
For the six months ended December 31, Blackmores posted an 11% increase in half year revenue to $319 million and a flat net profit after tax of $34 million. This was notably lower than the market's expectations.
Adding to the selling pressure was the fact that management doesn't expect things to improve in the second half. Ordinarily the second half is the strongest of the two, but this year management expects its profit result to be lower half on half.
The reason for this is weakness in the China market where its sales are expected to be hit due to the changing ways consumers purchase its products, higher inventory levels, and a general softening of consumer sentiment.
Looking ahead, unless things improve in the short term, Blackmores' profit growth in FY 2020 may be reliant on the success of its Business Improvement Program. This has just been established and is targeting $60 million of savings over the next three years.
Should you buy the dip?
Based on Goldman Sachs' earnings per share forecast of $3.75 for FY 2019, Blackmores' shares are currently changing hands at 25x forward earnings.
Given its many issues, continued underperformance, and the recent resignation of its CEO, I'm staying away from its shares for now and will focus on opportunities elsewhere.
Fellow exporters A2 Milk Company Ltd (ASX: A2M) and Bellamy's Australia Ltd (ASX: BAL) could be worth considering.
